Also troubling was that an additional 20 percent of people age 60 and older say they’ve given no thought at all to planning for their retirement. That was also the case for about 19 percent of people ages 45 to 59.

Sara Rix, a senior strategic policy adviser with the AARP Public Policy Institute, says the Fed survey reinforces what other studies have shown for years – that people may not be able to maintain their standard of living once they leave the workforce for good.

“Many Americans near retirement age have not saved adequately – often because they lack access to a retirement savings plan or because they have little extra income to save,” Rix said.

“Continuing to work may be one of the few options available to those who are not financially prepared for retirement, and many older Americans expect to do just that … but it doesn’t always work out,” she said. “Far fewer Americans actually work in retirement than say they expect to, often for reasons beyond their control. For those with little or no retirement savings and dim job prospects, a much reduced standard of living in retirement may be the sad outcome after a lifetime of work.”

About half of full-time workers, and even more part-time workers, don’t have access to employer-provided retirement savings plans. And not surprisingly, those with higher incomes were more likely to save than lower earners, the survey found.

So how are current retirees paying for their golden years? About 75 percent cited Social Security, the survey found. Some 44 percent said pension plans. Nearly 32 percent had savings outside of a retirement account. Almost 29 percent had an IRA and nearly 19 percent said they were relying on a 401(k)-type plan.

The Fed commissioned the survey last year to better understand how consumers perceive their financial well-being and how certain money matters shaped their decision-making and spending patterns. Results of the survey, which polled more than 4,000 people, were released last week.

Although the recession officially ended in June 2009, its effects are still reverberating through many households. Nearly 40 percent said they were barely managing to get by. And more than one-third said they went without some form of medical care in the last year because they couldn’t afford it.

The Fed’s findings contrast with those of another survey released last week by Baltimore-based T. Rowe Price. The investment firm asked recent retirees how they were faring now that they had been retired for one to three years. Most said they were living on 66 percent of their preretirement income on average – $58,000 annually – and reported that they were very satisfied. The retirees surveyed had a 401(k) or IRA and median household savings, including any home equity, of $473,000. They also said they had adjusted their spending in retirement.

I suggest we turn social security into a straight insurance plan (right now its combined savings and insurance plan). You pay your premiums while working, then if you earn or otherwise have income of less than $50K a year after age 65, you get monthly payments. Or $75K or $100K - whatever cutoff you like. But there's no reason someone making $100K or more a year in retirement needs social security payments! Have it re-evaluated each year, so if/when they stop having that kind of income, their SS benefits kick in. If we do that, plus removing the income cap from SS taxes (right now earnings above $117,000 a year are exempt from the tax) would make the program financially solvent from now on. You might even be able to increase benefits!

For those thinking that social security income is enough to get by on without savings, think again. What happens if you need skilled nursing home care? I just had to find a place for my mother - the cheapest one was $5,700 a month and an hour's drive from my home. Medicare doesn't cover the whole amount, and you'll likely have plenty of expenses on top of those which aren't covered by SS or Medicare. Don't forget that if you're married, your spouse also needs income to live off of after paying for your nursing home care, doctors and prescriptions (did you know that multiple sclerosis drugs can run $1,000 or more a month?) Prepare for the worst, hope for the best.

People without savings accounts aren't always poor money managers. Sometimes just getting by is as much as they can afford to do - savings are impossible. Whether its family health considerations, poor condition of housing or transportation, a minimum wage job, disabilities that don't allow for full time work or just really, really bad luck, savings aren't always possible. In the last recession many people thought they were financially secure because they had lots of equity in their home and large investment accounts. They found out the hard way that both of those things disappear in a world wide recession. If that's your situation at 60, you don't have much time to recover financially before you have to start taking funds from your assets to cover your living expenses. If you're forced to sell at the bottom of the market, you can't recover those losses at all.